Iowa Loan Company Bond

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Iowa Loan Company Bond: A Comprehensive Guide

This guide provides information for insurance agents to help loan companies obtain Iowa Loan Company Bonds

At a Glance:

  • Lowest Cost: $375 per year or $38 per month based on the applicant’s credit
  • Bond Amount: $25,000
  • Who Needs it: All loan companies operating in Iowa
  • Purpose: To ensure the public will receive compensation for any damages should the loan company fail to comply with licensing law
  • Who Regulates Loan Companies in Iowa: The Iowa Division of Banking
Iowa Loan Company Bond Form
Iowa Loan Company Bond Form


Iowa statute 536.1 requires all loan companies operating in the state to obtain a license with the Division of Banking. The Iowa legislature enacted the licensing laws and regulations to ensure that loan companies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, loan companies must purchase and maintain a $25,000 surety bond to be eligible for licensure.

What is the Purpose of the Iowa Loan Company Bond?

Iowa requires loan companies to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the loan company fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the loan company breaks licensing laws.

How Can an Insurance Agent Obtain an Iowa Loan Company Surety Bond?

BondExchange makes obtaining an Iowa Loan Company Bond easy. Simply login to your account and use our keyword search to find the “loan” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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Is a Credit Check Required for the Iowa Loan Company Bond?

Surety companies will run a credit check on the owners of the loan company to determine eligibility and pricing for the Iowa Loan Company bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Iowa Loan Company Bond Cost?

The Iowa Loan Company surety bond can cost anywhere between $375 to $1,250 per year or $38 to $125 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $25,000 bond requirement.

$25,000 Loan Company Bond Cost

Credit Score Bond Cost (1 year) Bond Cost (1 month)
800+ $375 $38
650 – 799 $500 $50
600 – 649 $1,000 $100
550 – 599 $1,250 $125

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Iowa Define “Loan Company?”

To paraphrase Iowa Statute 536, a loan company is any business entity who provides a borrower with money that must be repaid over a specified period of time at a set interest rate.

Iowa Loan Company Bond

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How do Loan Companies Apply for a License in Iowa?

Loan companies in Iowa must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.

License Period – The Iowa Loan Company License expires on December 1 of each year and must be renewed before the expiration date

Step 1 – Request a NMLS Account

All Iowa Loan Company License applications are submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 2 – Obtain a Master License

Loan companies must obtain a master loan company license prior to applying for a branch location license, a surety bond is not required for the master license. Loan companies can complete their master license application electronically through the NMLS.

Step 3 – Obtain a Branch Office License

After obtaining a master license, loan companies must then obtain a branch license for physical location the loan company operates. There are multiple types of branch licenses, and loan companies must submit an application for the license type that corresponds to the nature of their business. All branch license applications are submitted electronically through the NMLS

Step 4 – Purchase a Surety Bond

Loan companies must purchase and maintain a $25,000 surety bond

How Do Iowa Loan Companies Renew Their License?

Loan companies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Iowa Loan Company License expires on December 1 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Iowa Loan Company License?

The State of Iowa does not require loan companies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Loan companies must purchase and maintain a $25,000 surety bond.

How Do Iowa Loan Companies File Their Bond?

Loan companies should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the loan company. The surety company should include the following information on the bond form:

  • Legal name and address of entity/individual(s) buying the bond
  • Surety company’s name, address and phone number
  • Bond amount
  • Date the bond goes into effect
  • Date the bond is signed

What Can Iowa Loan Companies Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, loan companies in Iowa must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

  • Pay all required taxes and fees
  • Properly account for all funds received
  • Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Loan Companies in Iowa?

Iowa does not require loan companies to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Iowa Loan Company Customers?

The NMLS conveniently provides a public database to search for active loan companies in Iowa. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

Iowa Loan Company Bond